Mexico hits new remittance record

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Daniel Webber
Daniel Webber
Founder & CEO
Daniel is Founder and CEO at FXcompared and has numerous years of experience in the international finance world, especially within the media, technology and property sectors. Daniel is passionate… Read more
  • Over 90% of remittances that entered Mexico came from its neighbour, the United States
  • Some Mexican towns received millions of dollars in remittances in 2018 alone
  • The projected growth for 2019 is lower than 2018’s 10%

 

Mexican migrants sent 10.5% more to the country in 2018 as compared to the year before. The new historical record amounted to $33,481 million, according to reports and most of it came from Mexican workers living in the United States. To reach the new record, migrants did an estimated 104 million transactions during the course of the year, 94.1% of which came from the US.

The Mexican diaspora in the United States transfer money internationally on a regular basis to support family back home. Last year, migrants sent an average of $321.4 per transaction. A whopping 97.7% of these transactions were sent electronically thanks to cheaper overseas transfer rates offered by digital channels, a development that benefits the burgeoning digital remittance industry.

While Mexican migrants still go to remittance centres to transfer money to friends and relatives, most keep up with banking technology to save on remittance fees. Sending money through MoneyGram usually costs over $9 per transaction and Western Union has approximately the same fees. While this is reasonable, it can still take a big chunk of the money sent when transfers are done on a monthly basis.

Money sent to Mexico is usually spent on necessities such as food, rent, utilities, clothing and schooling. Based on government data, the country’s remittance inflow went to non-banking institutions. It includes pharmacies and stores.

Seven Mexican states benefited from half of the inflow, reports note, and this includes Michoacán, Jalisco, Guanajuato, State of Mexico, Oaxaca, Puebla and Guerrero. Data also shows that the municipality of Tijuana received the most among other towns in the country in 2018 and it amounted to $450 million. It is followed by Puebla at $435 million, and Morelia which received a total of $426 million. Guadalajara also received $421 million in remittances last year.

While remittances enjoyed growth last year, the projected growth for 2019 is only at 6.9%. Researchers say that 2019 remittances will likely reach $35.8 million or a little less.
It is noted, however, that Mexicans sent $1 billion in remittances abroad, $438 million of which was sent to the US. Migrant workers in Mexico also sent $155 million to Colombia, $72 million to China, $28 million to Peru, $21 million to Guatemala and $20 million to Honduras.

With US President Donald Trump’s anti-immigrant measures, remittances sent to the country will be affected in the coming months, experts note. The flow of remittances may even take a beating from proposed taxes by the Trump administration. Experts add though that looming economic downturn in the US will have a more severe impact on Mexican remittances than Trump’s migration policies.

Get the latest news about the remittance industry by following our magazine. You can check out what has been happening in the sector here.


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